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Deloitte Brexit Briefing | German industrial sectors’ ties with the United Kingdom March 2017 3
Transcript of German industrial sectors’ ties with the - Deloitte US · political consequences. Brexit means a...
Deloitte Brexit Briefing |
German industrial sectors’ ties with the
United KingdomMarch 2017
3
Deloitte 2017 | Page 2
The current issue
Brexit perspectives
Deloitte Brexit Briefings
Deloitte Brexit Briefings series
In the current issue, German industrial sectors’ ties with the United Kingdom, we take a look at German industrial sectors’ links with the United Kingdom and the consequent concern of the German industrial sectors over Brexit.
The data on which this new industry perspective is based are details provided by German companies about the sales and number of employees of their British subsidiaries. Based on this data, the information provided by the companies is aggregated at the sector level, thus permitting statements about the sector-specific importance of the UK as a location.
The United Kingdom’s decision, in June 2016, to leave the EU will have far-reaching economic and political consequences. Brexit means a fundamental change in the corporate environment for German companies.
In this context, the Deloitte Brexit Briefings shed light on the core issues and risks of Brexit from an economic, strategic, tax and legal perspective, and hope to provide guidance on the complex effects of the Brexit and the Brexit process.
Deloitte 2017 | Page 3
The big German groups earn nearly one euro in ten in the United Kingdom. Their sales there total more than €150bn.
Key Findings
Executive Summary
Of the 400,000 employees of large German companies in the UK, about one in four works in the transport and logistics sector (95,700 employees).
With sales of more than €40bn, the German automotive industrygenerates more than a quarter of total German sales in the UK and twice as much as the other industries in the manufacturing sector together.
The biggest employers with the highest sales are companies in the DAX index. They account for more than 60 % of German sales (€91bn) in the UK, employing 200,000 people, or nearly 50 % of the staff of German companies in the UK.
Deloitte 2017 | Page 4
0
5
10
15
20
25
30
35
40
45
0 10 20 30 40 50 60 70 80 90 100
Five sectors are particularly tied to the UK
Executive Summary
Automotive sector
Transport / logistics
Finance and insuranceTrade
Energy sector
Information and communications
Electronic engineering
Construction industry
Plastics and building materialsPharmaceutical industry
Mechanical engineering
Chemical industry
UK s
ale
s in €
bn
UK employees in thousands
Introduction and methodologyThe activities of German sectors in the UK
Deloitte 2017 | Page 6
A new perspective shows the close ties between German industrial sectors and the United Kingdom
Introduction
The United Kingdom (UK) is Germany’s third most
important (goods) export market with a volume of
€89bn. At the same time, imports from the UK amount
to €38bn.
In order to get a more accurate picture of economic
relations, Deloitte analysed the business activities of
German industrial sectors in the United Kingdom.
Based on this new perspective, it is possible to show
which German sectors are most strongly represented in
the UK with regard to their sales and workforce.
Deloitte 2017 | Page 7
Comprehensive analysis of German subsidiaries in the UK
Methodology
The details contained in the Factiva / Dow Jones company
database on British subsidiaries of German companies with
their international headquarters in Germany serve as the
data basis.
A further criterion* for the identification of intensive
business relationships was the number of employees in
the subsidiaries. Thus only companies with at least 100
employees in the United Kingdom were selected.
For the purpose of general presentation, the company
data were aggregated to their respective sectors. As a
result, the average turnover and employee share are
attributable solely to the selected companies and their
industry. In sectors involving only a few companies, the
influence of the individual company on the average
proportion is correspondingly large. *In all, around 1,000 companies with international headquarters in Germany and at least one subsidiary in the United Kingdom were identified. However, due to the chosen criterion of at least 100 employees in the UK, the number decreased to 160 companies with an intensive business relationship with the United Kingdom.
Companies with headquarters in Germany
At least one subsidiary in the UK
At least 100 employees in the UK
160 companies with an intensive business relationship with the United Kingdom
Deloitte 2017 | Page 8
Above all, major German companies, as well as the financial and manufacturing industries, are active in the United Kingdom
German companies in the UK
22%
78%
Less than €1bn At least €1bn
The majority of the companies are groups operating internationally
Of the companies in the DAX-30 index,28 have at least one subsidiary in the UK
Company size by sales Company share by sector (N = 160)
10 %
9 %
8 %
8 %
7 %
5 %
4 %
3 %
4 %
2 %
2 %
13 %
Mechanical engineering
Electronics sector
Automotive sector
Chemical industry
Trade
Transport / logistics
Energy sector
Information and communications
Construction industry
Plastics and building materials
Pharmaceutical industry
Finance and insurance
SalesHow much do large German companies turn over in the United Kingdom?
Deloitte 2017 | Page 10
Large German companies generate more than €150bn in the UK, and thus on average 8 % of their total turnover
UK sales of German corporations
The DAX corporations operating in the UK achieve sales of €91bn and
unite 62 % of the sales generated by German companies in the UK.
The share in sales varies widely between DAX companies. On average, they
represent 5.7 % of total turnover.
The sector with the highest turnover is the automotive sector.
It generates sales of €40.1bn, followed by the energy sector and the
transport and logistics sector with sales of €24.3bn and €20.6bn
respectively.
Deloitte 2017 | Page 11
The German automotive sector generates by far the highest sales in the UK
UK sales of German corporations
40,1
24,3
20,6
20,0
18,7
3,3
3,2
3,1
2,6
2,2
2,1
1,3
0 10 20 30 40 50
Automotive sector
Energy sector
Transport and logistics
Finance and insurance
Trade
Information and communications
Pharmaceutical industry
Electronics sector
Chemical industry
Mechanical engineering
Plastics and building materials
Construction industry
€bn
Deloitte 2017 | Page 12
17,8%
13,9%
11,7%
9,3%
9,2%
7,9%
7,6%
6,6%
6,3%
5,6%
5,6%
5,3%
0% 5% 10% 15% 20%
Construction industry
Energy sector
Transport and logistics
Trade
Finance and insurance
Information and communications
Plastics and building materials
Mechanical engineering
Pharmaceutical industry
Automotive sector
Chemical industry
Electronics sector
However, German companies in the construction and energy sector achieve the highest proportion of their sales in the UK
UK sales of German corporations
Proportion of
sales in the UK
* Note: Information on the sector’s average proportion of sales relates exclusively to the companies selected for our analysis.
In sectors with only a few companies in the analysis, the influence of the individual company is correspondingly large.
EmployeesHow many people do large German companies employ in the UK?
Deloitte 2017 | Page 14
German companies employ around 400,000 people in the UK, an average of 6 % of their total workforce
Employees of German corporations in the UK
The biggest employers are companies in the DAX index. They alone
employ around 200,000 staff and an average of 6.1 % of their total
workforce in the UK.
The biggest employers are in the services sector: above all transport and
logistics (95,700 employees), finance and insurance (59,100 employees)
and trade (44,600 employees) are big employers in the UK.
Deloitte 2017 | Page 15
Of the German sectors operating in the United Kingdom, the service sector employs the most
Employees of German corporations in the UK
95,7
59,1
44,6
35,6
25,2
23,0
18,7
10,9
9,5
5,2
4,7
3,1
0 20 40 60 80 100 120
Transport and logistics
Finance and insurance
Trade
Automotive sector
Energy sector
Information and communications
Electronics sector
Plastics and building materials
Construction industry
Mechanical engineering
Pharmaceutical industry
Chemical industry
In thousands
Deloitte 2017 | Page 16
However, companies in the energy sector and in the construction sector have the highest proportion of their employees in the United Kingdom
Employees of German corporations in the UK
15,7%
15,1%
9,0%
8,6%
7,1%
6,8%
6,3%
3,8%
3,8%
3,5%
3,0%
3,0%
0% 5% 10% 15% 20%
Energy sector
Construction industry
Finance and insurance
Transport and logistics
Trade
Plastics and building materials
Information and communications
Electronics sector
Pharmaceutical industry
Mechanical engineering
Automotive sector
Chemical industry
Proportion of employees in the UK*
* Note: Information on the sector’s average proportion of sales relates exclusively to the companies selected for our analysis.
In sectors with only a few companies in the analysis, the influence of the individual company is correspondingly large.
SummarySales and employees in the UK
Deloitte 2017 | Page 18
Industry sector Sales (€bn) Avg. share in sales
Automotive sector 40.1 5.6 %
Energy sector 24.3 13.9 %
Transport and logistics 20.6 11.7 %
Finance and insurance 20.0 9.2 %
Trade 18.7 9.3 %
Information and communications 3.3 7.9 %
Pharmaceutical industry 3.2 6.3 %
Electronics sector 3.1 5.3 %
Chemical industry 2.6 5.6 %
Mechanical engineering 2.2 6.6 %
Plastics and building materials 2.1 7.6 %
Construction industry 1.3 17.8 %
The sector with the highest turnover is the German automotive sector.
Summary
Deloitte 2017 | Page 19
Most employees of German companies work in the British services sector
Summary
Industry sector Employees (thousands)
Avg. share of employees
Transport and logistics 95.7 8.6 %
Finance and insurance 59.1 9.0 %
Trade 44.6 7.1 %
Automotive sector 35.6 3.0 %
Energy sector 25.2 15.7 %
Information and communications 23.0 6.3 %
Electronics sector 18.7 2.6 %
Construction industry 12.9 15.1 %
Plastics and building materials 10.9 6.8 %
Mechanical engineering 5.2 3.5 %
Pharmaceutical industry 4.7 3.8 %
Chemical industry 3.1 3.0 %
Deloitte 2017 | Page 20
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